Bloomberg Businessweek - USA (2019-06-17)

◼ BUSINESS Bloomberg Businessweek June 17, 2019

18

COURTESY ARMANI; ILLUSTRATION BY CÉSAR PELIZER; DATA: SKYSCANNER

THEBOTTOMLINE Asluxurygoodsmakerscopewiththe

internetandtiltofferingstowardyoungerconsumers,thefutureof

classicbrandssuchasArmaniis unsettled.

WhenGaleottidiedin1985,Armaniwasforced

tomakewhathecalleda “crucialdecision”:bring

innewbusinesspartnersorevenselloutrightsohe

couldfocusondesign,orbecomea forceinbusi-

nessaswellasdesign.“Idecidedtoembracethe

challenge,”Armanisays.“AndfromthatdayI never

lookedback.”Hespentthenextthreedecadescraft-

inga totallifestylebrand,leadingtheluxuryindus-

try’spushintoeyewear,homegoods,andfurniture.

He’sopenedrestaurantsandhotelsfromMilanto

Dubai,wherethe160-roomArmaniHotelDubai

occupies 10 floorsintheworld’stallestskyscraper.

Whereas Frenchluxuryrivals LVMH Moët

Hennessy-LouisVuittonandHermèsbuilta busi-

nessbysnubbingwholesalers,Armaniwasmore

opportunistic,sproutingsubbrandstotargetcus-

tomerswithdifferenttastesandbudgets,indiffer-

entkindsofstores.Hisfamouslymeticuloushand

preservedtheclassicappealofhishigh-endGiorgio

Armaniandmade-to-orderArmaniPrivélabels.

Theriseofe-commercehasmuddiedhismessage,

though,astheincreasedvisibilityofmoreafford-

ableproductshasraisedthelikelihoodofdistract-

ingconsumers.Inonlinesearches,$60sweatpants

fromhisEA7leisure-wearlineandevenEmporio

Armanijockstrapspopupbeforehis$2,000suits.

Armaniisn’ttheonlyclassicItalianbrandstrug-

glingtodefineitsspace.Tod’sSpA,makerof$

suededrivingloafersandstaidhandbags,and

SalvatoreFerragamoSpA,withsilkscarvesand

countryclub-friendlyVarapumps,areamongthe

companiestoseesalesfalloverthepasttwoyears,

evenasChinesedemandpushedFrenchrivalsLouis

VuittonandGucciownerKeringSAtorecordhighs.

ButArmani’scompanyisstillgrowinginkey

fields:Incosmetics,itsfoundationsandfragrances

suchasSìPassioneandAcquadiGiòcologne

helpeddriveL’Oréal’ssales.Armanihadfreecash

flowofmorethan€1billion($1.1billion)whenit last

reportedearnings,inAugust2018. Still, the empire

is guarded about the pace of its turnaround. The

company has yet to announce its results for last year

and declined to make other executives available.

In the wake of Lagerfeld’s death, generational

issues plaguing the fashion industry are more in the

spotlight than ever. Miuccia Prada, LVMH’s Bernard

Arnault, and other aging designers and entrepre-

neurs appear irreplaceable, and luxury companies

have done little to clear up questions over succes-

sion. Faced with the challenge, Fendi, Bulgari, and

Gucci have all sold themselves to French luxury con-

glomerates beginning in the 1990s, and Donatella

Versace handed control last year to the American

group Michael Kors Holdings Ltd. For his part,

Armani—who’s never married or had children but

is closewitha sisterandtwonieces,whoalsowork

withthecompany—has created a foundation that

will inherit ownership of the company upon his

death and be charged with guarding its indepen-

dence and supporting social causes.

Armani continues to tack on new projects:

developinga suiteofluxuryapartmentsattached

tohisMadisonAvenueflagshipstoreinNewYork

andclinchinga dealforEmporioArmanitooutfit

the Italian national soccer team. At his personal

museum, where mannequins stand in clusters

throughout four mostly windowless stories like

guards at an emperor’s tomb, Armani has tried to

liven up things by hosting events to try to keep his

brand relevant. There was a retrospective on the

architect Tadao Ando during the latest Milan Design

Week and a workshop for aspiring filmmakers led

by Call Me By Your Name director Luca Guadagnino.

Armani’s hunger to branch out into new activities

may be responsible for the tentacled structure his

company is scrambling to revise—but the diversity

of his empire might also be what saves him. “Luxury

isn’t only about selling handbags or lipsticks any-

more, it’s selling a whole experience. Armani is one

of the only brands that’s had success getting into

all sorts of different things,” says Elspeth Cheung,

brand valuation director at Kantar’s BrandZ divi-

sion. Even as sales shrank, Armani’s presence in

categories such as hotels as well as strength in entry-

price categories such as beauty helped the value

of his brand increase 5% last year, according to

BrandZ. “They’re providing a unique experience,”

Cheung says. “Armani has a very good potential to

revive the brand.” �Robert Williams

▲ Armaniin hisMilano

studio, 1978